We believe FY16 marked a turning point for Stobart, as its Energy (biomass) and Aviation (Southend Airport) businesses began to make meaningful progress on their ambitious FY19 targets. Improving returns on these drive our three-year EBITDA CAGR for Stobart Group to 25% by FY18. However, continuing upside from monetising its significant land bank is equally important. Land disposals have paid for Stobart’s dividend while its operating activities have been ramping up. With both operational and investment returns driving improving cash flow, we are optimistic about Stobart’s outlook and ascribe a fair value of £1.35 to the stock.
